Silver Price Forecast: Bulls have the upper hand while above the $35.40 horizontal support

• Silver struggles to capitalize on the previous day’s strong move up to the weekly high.
• The mixed technical setup warrants some caution before placing fresh directional bets.
• Weakness below $36.00 could be seen as a buying opportunity and remain cushioned.

Silver (XAG/USD) attracts some sellers near the $36.55-$36.60 region during the Asian session on Thursday and erodes a part of the previous day's strong move up to the top end of the weekly range. The white metal currently trades around the $36.40-$36.35 area, down 0.50% for the day, as traders keenly await the release of the US Nonfarm Payrolls (NFP) report before placing fresh directional bets.

From a technical perspective, the Moving Average Convergence Divergence (MACD) histogram and the signal line on the daily chart have turned lower. However,  the daily Relative Strength Index (RSI, 14) remains above 50, warranting some caution for the XAG/USD bears. Hence, any subsequent fall below the $36.00 mark might still be seen as a buying opportunity and remain limited near the $35.50-$35.40 horizontal support.

The latter should now act as a key pivotal point and a convincing break below could prompt some technical selling, paving the way for a slide towards the $35.00 psychological mark. Some follow-through selling would make the XAG/USD vulnerable to accelerate the descending trend further toward intermediate support near the $34.75 area before eventually dropping to the next relevant support near the $34.45 region.

On the flip side, a sustained strength and acceptance beyond the $36.55-$36.60 supply zone could allow the XAG/USD to make a fresh attempt towards conquering the $37.00 mark. The momentum could extend further toward the $37.30-$37.35 region, or the highest level since February 2012 touched earlier this month. Some follow-through buying would set the stage for an extension of a nearly three-month-old uptrend.

Silver daily chart

Silver FAQs

Why do people invest in Silver?

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Which factors influence Silver prices?

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

How does industrial demand affect Silver prices?

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

How do Silver prices react to Gold’s moves?

Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.

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